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Binary Options Success Guide
The advantages of binary options trading, is that the risk involved is significantly less than other financial market investments. None the less, there are important steps that a trader should take to insure that the trades are “in-the-money”. We've outlined these useful steps in this guide that you can take in order to help pave the way for your binary options success.
Market news, and the different events that are orchestrated on Wall Street from it, can be pretty entertaining. If you're reading this article, you're probably someone who gets some joy from financial news in some sort of way. Either you understand basic economics, and financial news captures your attention, or the reading of articles about the Megalodon US companies, and how they gobble up market share excites you to a point that you're willing to invest time in reading them. Either way, you would be qualified to gather market knowledge.
So market knowledge can come from many different sources. The key is to make sure that you are gathering your market knowledge from good sources. CNBC, Bloomberg, The Wall Street Journal, are good sources that provide really good content. The idea behind gathering market knowledge is to be able to understand market price fluctuations, and be able to make predictions based on them. Start to understand market knowledge, and the different factors that affect price movement. This can generally take a few weeks of watching an assets' performance in the market, before understanding well. Market knowledge and research gives you the necessary preparation you need to trade successfully. Create good study habits, and market research can work in your favor.
Timing of your Investments
The price of binary options are usually locked 15 minutes before the expiry time so that the ultimate price of the stock, commodity currency pair or index can be accurately given at the end of the expiry time. So, the thinner the time gap between the purchase and expiry of the asset, the more essential the asset becomes. With proper analysis of the asset''s movement in different time frames, the investors can professionally time their investments to gain profits. Heed must be taken not to leave the purchases too late, but just early enough that you can increase the chances of success of the prediction.
Traders cannot become emotional with new strategies provided for binary options and rush into investments. They must first get familiar with the risks involved and the mechanics of binary options trading. Never go 'all in' if you will with your investments before having adequate experience to do so. The traders must start with small investments and gradually gain confidence that will lead to larger investments. The concept of getting rich quick never works and results could end up quite the contrary to their expectations.
Make an Effort to Minimize the Risks
When an investor is “in-the-money” return on the investment is around 60 – 70% and if trades are not in his favor, and the trader is 'out-of-the-money' a 15% rebate on the investment is returned to the trader. But there is a way to minimize losses when the danger of running into out-of-the-money trades arises. Let's say a trader buys a call option on an asset worth $100 and the price of the asset needs to move $300 higher to be in-the-money by expiry. If the trader succeeds a 60 to 70% profit will be made, (let's say $60 profit on the $100 trade) or otherwise suffer an 85% loss. If the trader realizes before the expiry of the trade that the asset might move against the option, he or she can buy a put option in order to curb the size of the loss that will incur from the out-of-the-money trade.
The Bottom Line
This guideline of trading binary options, if used with dedication, and care, can put you on the right track for successful trading. Apply the principles above to your trading practices, and regardless if the market is going through good days or bad day, it will always work in your favor.